2014 (8) TMI 1125

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..... After the allotment, the shares were immediately sold and interest was paid for a shorter period of 15 to 20 days for the monies borrowed. Assessee has paid total of Rs. 65,29,462. The details of the interest paid on various shares as well as to various finance companies are extracted by the A.O. and Ld. CIT(A) in the orders, hence, does not require any repetition. 2.1. The facts are that assessee has invested in shares by borrowing the amount from three financiers and paid the interest for the short period during the year. Assessee consequent to the sale of shares offered capital gains to an extent of Rs. 3,71,95,856, after adjusting the above interest claimed. A.O. noticed that this amount cannot be allowed and relying on ITAT decisi....

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.... Limited & Others (ITA No.5779/ Mum/2006 (ITAT Mumbai). 7.4 As per Section 48, the income chargeable under the head "Capital Gains", shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts: (i) Expenditure incurred wholly and exclusively in connection with such transfer; (ii) The cost of acquisition of the asset and the cost of any improvement. The appellant also submitted copies of account statements from Multifaced Finstock (P) Limited reflecting amount borrowed and interest amount paid, amounting to Rs. 58,01,043. In this connection, the appellant relied on the following case-laws in support of ....

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....urred for acquisition of shares, particularly when the short term capital gains on sale of shares was offered for taxation and the provisions of Section 14A will not apply to disallowance of such interest expenditure when the income earned from sale of shares formed part of the total income of the appellant. Hence, I delete the disallowance of interest expenditure of Rs. 65,29,462." 4. After considering the rival contentions, we do not see any reason to interfere with the order of the Ld. CIT(A). As already held by the Hon'ble High Court in the case of CIT vs. Mithlesh Kumari 92 ITR 9 (Del.) the actual cost of capital asset should include interest paid on borrowed amounts at the time of purchase. The Hon'ble High Court of Madras in the c....